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Grid parity, but at what cost?

The third annual PV Power Plants conference in Vienna continued today with questions being raised about the hidden cost of falling module prices. Specifically, it was asked what kind of R&D will be able to be undertaken by photovoltaic module manufacturers in a price war?

The question as to what level of standardization is needed was one raised at the PV Power Plants EU conference.

Gehrlicher Solar AG

The topic was raised in the Plenary session of the conference, with Navigant Consulting market analyst Paula Mints introducing the issue as to the sustainability of the industry when module prices are falling so rapidly. In such an environment, argued Mints, firms are unable to carry out the vital R&D.

She explained the market machinations underpinning this effect in a response to a question towards the end of the session: "Prices are held down now by very high levels of inventory, very high levels of capacity, reduced incentives. The rumours of extremely low prices - that is really the reselling of inventory - and that is held down by manufacturers that are selling it below cost."

In this environment, Mints continued that, "manufacturers are going to fail" and R&D programs will stall. "Companies don’t have the money to make improvements on efficiency and truly reduce manufacturing costs."

In her presentation, the charismatic speaker described this as representing an "unsustainable industry" and decisively one that does not innovate or drive down process costs.

Researcher Anna Rosa Lagunas, from CENER in Spain, added that research must continue into how best photovoltaic power plants can be connected to the grid. "Maybe the possibility of continuing to build the big PV plants has to do with an optimized way of handling the feed of the energy into the grid. This is what we see as a limitation."

She continued that if the grid-connection challenges are not met, then more diverse photovoltaic applications will have to be a focus, both for researchers and also for the industry more generally. "What I see BIPV or the consumer products being an important way forward," Lagunas surmised.

Speaking from a position of considerable insight, the CEO of German EPC company Belectric, Berhard Beck addressed some of these challenges in his presentation. He also introduced a number of optimizing technologies that can be deployed to assist the integration of large photovoltaic power plants into the grid. 

In an appearance that impressed many conference attendees, Beck also made a very strong case for module and component standardization as being vital for the sector to continue to grow.

"We have to work closely with module manufacturers and we [BELECTRIC] are doing so, but we’re actually not working with too many manufacturers right now. We’re mainly driving the thin film game, First Solar and Solar Frontier, to see what we can do," Beck explained.

"The main picture that we see right now, is that we see modules as fuel in the same way that it is seen in automotive industry. We buy a certain fuel and we trust that fuel to last 25 years, to get us a certain ‘burn rate’ and see things the conventional power industry way." Beck continued: "But at the moment, to talk in terms of fuel, we don’t just have just diesel and gasoline, we have a thousand different fuel types! In PV industry we have maybe 10,000 different module types, this is the problem!"

Beck concluded that if there is a lack of standardization on a "fuel level" then there can’t be standardization in installation, and that this is a driver of cost. "There is so much cost to save, we – all of us here – must sit together to get this done!"

Researcher Lagunas countered immediately after Beck made his appeal saying that while standardization is a good thing for EPC’s, when it comes to research, non-standard technologies must continue to be explored. 

"Standardization of course, but we have research that is not standard. Solar resources are different in northern Europe, central Europe, Africa etc. [We need] standardization up to a certain level, we have different technologies for different regions," argued Lagunas.

PV Power Plants EU was hosted by pv magazine’s parent company Solarpraxis AG.